to curb risks@ (Adds quotes, finance ministry reaction)
BEIJING, Sept 22 (Reuters) - China's attempts to reduce risks from its rapid buildup in debt are not working as quickly as expected and credit growth is still too fast, S&P Global Ratings said on Friday, a day after it downgraded the country's sovereign credit rating.
While S&P had warned months ago that such a move may be on the cards, it said it decided to make the call after concluding that China's "de-risking" drive that started early this year was having less of an impact on credit growth than initially expected.
"Despite the fact that the government has shown greater resolve to implement the deleveraging policy, we continue to see overall credit in the corporate sector to stay at a 9 percent point", Kim Eng Tan, an S&P senior director of sovereign ratings, said in a conference call.
"Weve now come to the conclusion that while we do expect some deleveraging in the next few years, this deleveraging is likely to be much more gradual than we thought could have been the case early this year."
POINTED MESSAGE OR BAD TIMING?
S&P lowered China's sovereign credit rating one notch to A+ from AA-, putting it in line with those of Moody's and Fitch, though the timing raised eyebrows as it came just weeks ahead of one of the country's most political sensitive events, the twice-a-decade Communist Party Congress (CPC).
China's finance ministry said on Friday the downgrade was "a wrong decision" that ignored the economic fundamentals and development potential of the world's second-largest economy.
"China is able to maintain the stability of its financial systems through cautious lending, improved government supervision and credit risk controls," the Ministry of Finance said in a statement on its website.
"(S&P's) view neglects the characteristics of Chinas financial market fundraising structure and the accumulated wealth and material support from Chinese governments spending."
To be sure, China's economic growth has unexpectedly accelerated this year, racing ahead at 6.9 percent in the first half, but much of the impetus has come from record bank lending in 2016, a property boom and sharply higher government stimulus in the form of infrastructure spending.
And a recent Reuters analysis showed few listed companies including state-controlled firms are using a profit windfall this year to pay down debt.
The International Monetary Fund warned this year that China's credit growth was on a "dangerous trajectory" and called for "decisive action", while the Bank for International Settlements said last September that excessive credit growth was signalling a banking crisis in the next three years.
The IMF said in August it expected China's total non-financial sector debt to rise to almost 300 percent of its gross domestic product (GDP) by 2022, up from 242 percent last year.
"There has actually been some progress recently in tackling credit risks, particularly in reining in the activities of the 'shadow' banking sector (and) broad credit growth has slowed," Capital Economics said in a research note.
"But it continues to rise relative to GDP so the overall trend remains deeply unhealthy." (Reporting by Yawen Chen, Stella Qiu, Elias Glenn and Ryan Woo; Writing by Se Young Lee; Editing by Sam Holmes and Kim Coghill)